2014: The Collapsing Obamaconomy

The good news is the U.S. economy wheezed out 204,000 new jobs in October, despite all the sound and fury (signifying very little) over the 17%, 16-day-long government semi-demi-shutdown. The bad news is pretty much everything else, so let’s take a look at what lies underneath the big headline number.

CNBC put a happy face on the latest jobs report with the headline, “Shutdown slowdown? Job creation soars in October.” It’s true that 204,000 is a bit higher than the recent average of 190,000, but the story’s very first paragraph belies the word “soars.” Read:

There were a net 204,000 new jobs created for the month, though the unemployment rate rose to 7.3 percent and households reported a huge drop in employment, the Bureau of Labor Statistics said. A separate measure that includes the underemployed and those who have quit looking also moved higher, from 13.6 percent to 13.8 percent.

The story goes on to quote Moody’s Mark Zandi who called the jobs report “bizarre,” and said that he “wouldn’t be surprised if this gets revised to some degree…down.” So much for the downward revision to come “unexpectedly,” which is the word Reuters uses to describe the recent drop in U.S. consumer confidence:

The Thomson Reuters/University of Michigan’s preliminary reading on the overall index of consumer sentiment fell to 72.0 in November, its lowest since December 2011. That was lower than both October’s final reading of 73.2 and the 74.5 economists had expected this month.

Lower-income households in particular worried about their future financial state.

Lower-income households are right to be worried, in particular and in general — because their prospects aren’t looking so good. Consumer spending slowed last month on a “deceptively weak” GDP report. A big chunk of last quarter’s GDP growth was business inventories increasing on weak demand, and weak imports — another sign of weakening demand — also made growth appear bigger than it actually was.

“It’s a weird report” says Zachary Karabell, the head of global strategy at Envestnet and founder of River Twice Research in the attached video. “It’s people tending bar. It’s lower wage retail jobs. It’s lower wage health services jobs” that the economy is creating, and “a lot of these are not particularly well paid and they don’t have a great future.”

And that’s a problem. Not only for the 14-million American who are still out of work and looking to get hired, but more broadly, it undercuts the entire economy.

“If you’re earning $18,000 a year as a bartender, that’s not going to translate into massive consumer spending,” Karabell says.

How does that bartender compare with a bartender from last year? He’s not really doing any better at all. BLS reports that wages were 1.7% higher than last year, but that prices rose 1.6% during that same timeframe. That raise of one-tenth of one percent isn’t likely to result in a robust Christmas shopping season.

The real fun might begin next month, when Healthcare.gov is supposed to be up and running, and ready to deal with the expected rush of millions seeking new insurance policies before the New Year. Let’s assume that the site is functioning well enough, even if only barely, and that the state exchanges are up and running, too. Millions are going to find themselves facing the twin devils of higher premiums and higher deductibles. That means they’ll take home less pay, and have to sock away more money into savings. The resulting reduction in consumer spending — 70% of the U.S. economy — could be a body blow to our already weak growth.

Or suppose the rush never materializes, since only 22% of the uninsured actually plan on buying ObamaCare policies. That’s the “death spiral” insurers fear, when rising prices force out the young and healthy, leaving them with nobody but the old and sick. At the start of the new year, our economy might just be looking at a collapsing insurance industry, declining consumer spending, rising underemployment, and a shrinking labor force — all at once.

So if you’re lucky enough to be one of the employed and insured and the healthy, be sure to give your bartender a bigger tip. And tell him to make it a double.

Stephen Green began blogging at VodkaPundit.com in early 2002, and has served as PJMedia's Denver editor since 2008. He's one of the hosts on PJTV, and one-third of PJTV's Trifecta team with Scott Ott and Bill Whittle. Steve lives with his wife and sons in the hills and woods of Monument, Colorado, where he enjoys the occasional lovely adult beverage.

Half of the 200,000 odd jobs created last month were part time/retail hospitality jobs. Further more new bubbles are emerging in the auto loans and tech sectors. Big Auto is seeing a boom due to the ability of consumers with low credit scores to obtain financing (How is Dodd-Frank working out?). Both Facebook and Twitter are grossly over-valued. Twitter, with a market cap of $14 billion, lost $64 million last quarter. And there are other high tech firms such as Pinterest who lose money but are valued in the billions.

Wall St is the only sector of the economy which is doing well. But, the $2.7 trillion of QE remains bottled up in the banks; there is no velocity of money from the M1 to Main Street. If QE did flow downward and outward inflation would immediately rear its ugly head and the federal government would have to pay 7-20% interest on its $17 trillion debt. Can't have that.

The lower end of the income level resembles the French peasants during the final decades of the Bourbon Dynasty. They kept their heads above water only by treading water. A part-time cashier earning $18000/year saw a miniscule (perhaps $18/year increase in spending power) after inflation. Any slip and he goes under. For the French peasant, it was the insane tax policies of the realm and devastating famine brought upon by severe summer weather.

The US has a resilient history. The demographics and education levels have changed, the former bringing in many, including illegals, that lack the values that provoked the resilience. The latter, the educational brainwashing, removes the ability to think critically from many of the native-born, including people well into middle-age. The public has agreed to the Reid-Pelosi-Obama-con in exchange for 'security' which may prove a near-complete illusion if the economy tanks and the markets collapse. The genius of Americans in the past was the self-reliance that brought people through the hard times, and then propelled then forwards when things improved. I don't see that dynamic existing in critical mass any longer..

What's amazing is that the economy hasn't totally collapsed yet. There's no gas in the tank and the vehicle is coasting on residual momentum. When the fed props up the stock market by printing and giving it a $Trillion dollars per year in printed money with no backing and the government spends another $Trillion per year above what it takes in then doubles down by raising taxes and triples down by increasing regulatory and reporting burdens on business, it's a wonder there is any free market at all. The rich will weather the storm because they have the means to convert their paper money to tangible assets that survive inflation, but for the middle class and poor what we are witnessing is the largest government sanctioned theft of all of our assets and money in the history of the world by the con artists, consummate liars and criminals all, whom we elected as our politicians. And for those who say politicians with principles need to compromise, how does one compromise with the criminal who comes in the night to steal all you have, to rape your wife and children, then murder you and your family? How do you compromise with a Dem run Senate that refuses to pass a budget contrary to law for over 5 years, that says "no compromise" on debt limit or taxes or Obamacare, or a President that says "no compromise" with Republicans on anything, issues Executive Orders when he can't get Congressional Approval and commits perjury routinely in Congressional testimony and in public statements, and routinely violates law and regulation to enrich friends and punish adversaries? And all of it without consequences since he owns the US Attorney and all law enforcement at the federal level. And Reid, the Senate Majority Leader like the tyrant he is, totally controls the entire Senate agenda and will never allow the President to be removed from office for his blatant crimes. I just hope America is resilient enough to survive this disastrous Presidency and can restore respect for constitutional law, property and civil rights.

There are so many making so much noise about the criminally incompetent mechanics of the roll out of obamafraud that the actual problem is being shunted aside. The problem is NOT the roll out, rather, it is the thing itself. It is almost inconceivable that so many could be so stupid as to believe the con that the democrats perpetrated. Imagine someone telling you that you can buy more food for less money and the food will be a better quality. Additionally, all of your friends and neighbors, regardless of their incomes, will get the same deal. Most people would reject this non-sense out of hand. So, why have they fallen for it in this instance?

Add this - right now, most of the Obamacare disaster stories have to do with individuals needing to buy policies, previously 5% and with all the discontinuances it's still probably under 10%. Maybe 10% will never buy. But that means 80% may be hit by Obamacare and The Return Of The Employer Mandate when? Just in time for the 2014 elections. Rah!

Interesting that we are talking percentages now instead of millions. Remember when we were trying to help the 15-20-25...50 million (just make up a scary number... and does that include illegals too?) that "couldn't" get insurance? But now, oh well, only 5% lose their insurance...uh, 5%=15 million people. So 15 million lose so 15 million can gain. So fair.

October is usually a good month for the total number of people actually employed. September has been, except for a few times since the early 1950s, a bad month. So, typically, there's a drop in total employed in September, then a rise in October - though usually not as many get added in October as were lost in September. The last time fewer people were employed in October than in September? 1982. Yeah, 30 years ago. Having half a million fewer people employed in October than in September is not good at all.

I'm not enough of a BLS watcher to know if that number includes Federal employees or not. They do surveys to make educated guesses about the employment numbers and they also count "any" employment as being employed, so, it's always hard for me to figure out. (Just as the highly unusual numbers right prior to the 2012 elections - both months showing 700k more jobs and.... Obama got reelected.)

204,000 newly created jobs does sound good until you realize that manyor most of those jobs are temporary as businesses prepare for theholiday season. And of course the real, true unemployment rate ismore than 13%, so who does the government think it is fooling?Good luck, America.

204,000 new jobs sounds good until you realize that despite 204,000 new jobs, somehow, 507,000 fewer people were working in October than September. It's been over 30 years since October has had a lower employment number than September.

In my opinion, all these employment numbers in the article are false and have been for years. Jobs created numbers are usually revised downward while unemployment numbers are later revised upward, not to mention the selective data used to create these reports - garbage in-garbage out.

Compare wages/benefits from jobs lost to jobs created. Are these new jobs usually better or worse jobs? The stock market gains are based on what exactly...QE, twitter, facebook. Meanwhile crony capitalism continues to reward the crooks at the expense of taxpayers...you know $8 billion in taxpayer bailout money given to a bank for example and then said bank giving hundreds of thousands of it to someone to come give a speech...that kind of thing, etc.